Up to 3,000 more post offices could be closed if the government hands a key contract to one of the network's rivals, a union warned yesterday.

Already suffering from the latest round of branch closures, the viability of the network could be threatened if the Post Office fails to win the tender to provide the successor to the current Post Office card account (POCA) through which millions of people are paid benefits, according to the Communication Workers Union.

The union said yesterday it had written to James Purnell, the secretary of state for work and pensions, warning him of the consequences if his department does not renew the Post Office's contract.

The union's general secretary, Billy Hayes, said: "The Post Office card account is vital for the future stability of the Post Office. If the government does not award the contract to the Post Office it could sound the deathknell for the country's network of post offices."

The Post Office network is currently in the throes of a closure programme which will see the network reduced from 14,000 branches to 11,500. Campaigners have argued that the network has a crucial social as well as economic role.

"Losing the Post Office card account contract would undermine the sustainability of the post office network and would inevitably lead to the closure of around 3,000 post offices," Hayes said. "The impact would be felt by the most vulnerable in society, those least able to travel to an alternative outlet due to poor transport availability, economic, geographic or mobility factors, in addition to more job losses," Hayes said.

The Post Office has been introducing a new products and services but the loss of the POCA would be seen as a heavy blow. The Post Office is understood to face opposition from at least one other bidder.